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Battle lines drawn in engine cost debate

Mercedes-Benz

Mercedes and Ferrari are willing to negotiate the cost of their engine supply deals but have made clear they will not be able to slash their prices at the FIA's request.

Mercedes currently supplies three teams in addition to its works outfit, while Ferrari will take on a third customer next year when Haas joins the grid. FIA president Jean Todt is attempting to cap engine costs in order to ease the burden on F1's smaller teams and the Strategy Group recently gave the FIA and FOM a mandate to explore tweaks to the regulations to make it happen.

The current power unit/gearbox supply deals are estimated to be worth $17-22 million and, according to Auto Motor und Sport, the FIA wants to cut costs to $12 million for power units and $1.5 million for transmissions by 2017.

However, Ferrari and Mercedes have both invested heavily in the new V6 turbo and ERS technology over recent years and have built business plans around income from customers. Asked about the situation last weekend, Ferrari boss Maurizio Arrivabene made clear Maranello would not be willing to start subsidising the cost of the power units for its customers.

"Let me know another product somewhere in the world where you have to sell something at a set cost," he said. "We are negotiating to make sure we will offer the engine at the best possible price, but we can't give a present to anyone."

Toto Wolff said Mercedes is open to negotiations but could not simply tear up its existing business model.

"Mr Todt wants to try to reduce the engine prices for the customers and the smaller teams because the engine prices are quite a large chunk of the overall budget," he said. "We take it very seriously, we'll look into things, but unfortunately the situation is that we have set up a business case with these engines and we have an investment on the line. We acknowledge it's an important bit, so we are sharpening our pencils and looking at the situation and we promise to come back with an answer as to whether it is feasible or not.

"But it would massively impact the situation because in a large corporation you set up a business case, justify your investment and then you sign contracts. If that needs to be adjusted or changed because the environment is becoming more difficult it is a huge challenge for such an organisation like ours. You need to come up with a solution, have a plan and justify why we are changing things. That's the tricky bit."